Q&A for How to Create a Mortgage Calculator With Microsoft Excel

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Question

If I make extra payments on the loan, is there a formula that will recalculate the monthly payment?

Community Answer

Include 2 columns, one for interest component and the other with principal component. Add a new column next to principal title "additional principal". Now subtract it from the original principal.

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Question

In Excel, what's the formula to calculate a loan amount if I know the loan payment, interest rate and term?

Community Answer

Use the same formulas mentioned in method 1 above; however, use Goal Seek to automatically calculate the loan amount.

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Question

As I add extra payments into the loan, this adjusts the payment schedules accordingly, but is there a formula to show me how much interest or months I'm saving by making the payments?

Community Answer

Set up two spreadsheets, one containing your "base loan" with no extra payments, and the second containing the extra payments. The "sum of payments" will decrease as you add extra payments in the second sheet. Subtract this value from the "base loan" sum of payments to see how much you are saving by putting extra money into your loan.

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Question

Step 4 of Method 2 references formulas at the top of screenshots and a reference chart. Where are these?

Community Answer

The Fill option is usually located on the Home tab in Excel, in the "Editing" section. I'm unsure of what you're referring to with "formulas at the top of screenshots" or a "reference chart" as neither of those are mentioned in this article.

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Question

What is the payment per period formula using simple interest?

Community Answer

Use this simple interest calculator to find A, the Final Investment Value, using the simple interest formula: A = P(1 + rt) where P is the Principal amount of money to be invested at an Interest Rate R% per period for t Number of Time Periods.

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Question

If the interest rate is fixed for the first 5 years, but then it changes to something else, how do I recalculate using the new rate over the remaining years?

Community Answer

For an Adjustable Mortgage you are not able to predict the exact future percentage. Add an interest adjustment column for each payment. For the first five years the adjustment is 0. For the 6th year make the adjustment = to the maximum annual increase. For the 7th year make the adjustment = to the maximum annual increase When you reach the maximum interest allowed for your loan, continue to use that. With this method you predict the worst case scenario for an ARM.

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